City National Bank: 9 Critical Numbers
Apr 11th 2013 1:22PM
Updated Apr 11th 2013 1:28PM
Given that you clicked on this article, it seems safe to assume you either own stock in City National Corp. or are considering buying shares in the near future. If so, then you've come to the right place. The table below reveals the nine most critical numbers that investors need to know about City National stock before deciding whether to buy, sell, or hold it.
But before getting to that, a brief introduction is in order. While City National could easily be lumped together with regional banks, it more closely resembles a large community bank and trust with satellite offices in strategic cities throughout the country, including Las Vegas, New York City, Nashville, and Atlanta. Founded by a "small group of entrepreneurs in 1954," the bank is headquartered in Los Angeles and is loosely known as the banker to the stars given its past support of Frank Sinatra, Arnold Schwarzenegger, and others, and the fact that about one-fifth of its business loans are entertainment-related. Its balance sheet boasts $29 billion in assets and it oversees an additional $57 billion in assets under management or administration.
As you can see in the table above, City National's biggest strength is unquestionably its prudent management of credit risk. With a nonperforming loans ratio of 0.63%, the bank handily beats the industry average by over 120 basis points. Beyond this, and thanks in large part to its robust asset management and administration business, a respectable 32% of total revenue comes from noninterest sources.
On the other hand, City National slightly underperforms its peers when it comes to both net interest margin and efficiency ratio. The former is nine basis points less than the average of the 100+ banks sampled for this article series -- though, it's well within the first standard deviation. And City National's efficiency ratio -- which measures how much it costs a bank to produce each dollar of revenue -- is three percentage points higher than the selected peer group.
Despite the latter issues, however, and largely as a testament to its management of credit risk, City National's return on equity beats the sample by 60 basis points -- though it still underperforms the double-digit rate that most bank investors like to see.
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The article City National Bank: 9 Critical Numbers originally appeared on Fool.com.John Maxfield has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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